COMPETITIVE FORCES

Prepared by: Mahmoud Dalloul 120070211

Supervisor: Ms. Yasmin Al Bobo

UP 3(2009-2010)

Competitive Forces

Awareness of the five forces can help a company understand the structure of its industry and stake out a position that is more profitable and less vulnerable to attack.

Porter’s Competitive Forces

1. Rivalry of competitors within an industry

2. Threat of new entrants into an industry

3. Threat posed by substitute products which might capture market share

4. Bargaining power of customers

5. Bargaining power of suppliers

Porter’s Competitive Forces

Rivalry of competitors

Online-shopping, E-commerce increase rivalry

Price comparison tools (Google Product Search, Shopzilla, etc.) increase rivalry. Price transparency

Industries with high rivalry?

Industries with low rivalry?

Threat of new entrants

E-commerce enables a business to emerge overnight

A medium-sized retail store can become a global E-commerce competitor at little cost.

Whereas, it costs a lot to become a

global donut competitor

Substitute Products

Internet makes substitutes easier to find. Can’t afford to fly...take a train. Ipod to expensive...buy a Microsoft Zune

Bargaining power

Customer:

E-commerce has empowered the customer

Examples: Ebay Lending Tree Reverse auctions

Drives prices down!

Suppliers:

Example: A leading supplier can force retailers to invest in their Supply Chain Mgmt. system.

Pushes costs on to the retailer

More profit for the suppliers